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Who qualifies for student loan forgiveness under Biden’s plan?

Do you qualify for student loan forgiveness? After President Joe Biden’s student loan debt cancellation announcement, millions of borrowers can save thousands.
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President Joe Biden announced Wednesday his administration's plan for student loan debt forgiveness, following through on a key campaign promise of canceling debt for low- and middle-income borrowers.

Here’s how the decision will impact some 43 million people with student loan debt nationwide.

Who will get student loan forgiveness?

Biden’s plan calls for up to $20,000 in debt cancellation for borrowers who are recipients of Pell Grants, which according to the Education Department is a federal grant that is awarded to undergraduate students with “exceptional financial need,” and have an annual income of under $125,000 for individuals or under $250,000 for families filing jointly.

The plan also calls for $10,000 of loan forgiveness for all other federal borrowers, with the same income limits for individuals and families.

If you were claimed as a dependent on taxes, eligibility will be based on the income of the person claiming the dependent.

The administration said if all eligible borrowers claim their relief, the move will provide relief for up to 43 millions borrowers, including canceling “the full remaining balance for roughly 20 million borrowers.”

The White House also said it estimates that among borrowers who are no longer in school, nearly 90% of the relief will go to those earning less than $75,000 a year.

Students attend their graduation ceremony at UCLA
Students attend their graduation ceremony at UCLA in Los Angeles on June 14, 2019.Robyn Beck / AFP via Getty Images file

Which loans qualify?

Federal student loans will qualify, while those from private institutions do not. Undergraduate, graduate and Parent Plus loans qualify.

When do loan payments start again?

The Education Department also announced Wednesday a “final extension” of the federal student loan payment pause through the end of the calendar year. Payments restart in January.

Do I have to prove I qualify?

The Biden administration said it will announce more details on how people can claim relief “in the weeks ahead.” The Education Department said nearly 8 million borrowers “may be eligible to receive relief automatically because relevant income data is already available to the Department.” 

The administration also said an application is expected to be available no later than the end of the year, when the pause on federal student loan repayment ends.

The Education Department said those who want to be notified when the application is available should sign up at the subscription page on its website.

Who are Pell Grant recipients?

The White House said Wednesday that nearly every recipient of a Pell Grant comes from a household making less than $60,000 a year and that Pell Grant recipients are more than 60% of the borrower population.

“The Department of Education estimates that roughly 27 million borrowers will be eligible to receive up to $20,000 in relief, helping these borrowers meet their economic potential and avoid economic harm from the Covid-19 pandemic,” the White House said.

How do you know if you received a Pell Grant?

In order to be eligible for a Pell Grant, students must submit a form for Free Application for Federal Student Aid, or FAFSA. Schools will then use that information to determine eligibility for a Pell Grant and how much money will be received, according to the Education Department.

People can check the status of their eligibility on the Federal Student Aid website.

What are the exceptions?

The Biden administration has capped its relief funding at annual incomes of under $125,000 for individuals and under $250,000 for families filing jointly for both those who have and those who have not received Pell Grants.

Borrowers can qualify for debt forgiveness based on their income in either the 2020 or 2021 tax year. So if you earned $120,000 in 2020 but got a big raise in 2021, you still qualify.

It has also said that no high-income individual or household within the top 5% of incomes will benefit from the plan.

While the plan is expected to provide relief for millions of borrowers, the move falls short of the $50,000 in cancellation that some Democrats have called for.